eSpeed's Trading Secrets

On the 105th floor of New York's World Trade Center, a bond broker is sleeping, legs stretched out, head resting softly on the back of a chair. When he's awake, he takes phone orders for U.S. Treasury securities at Cantor Fitzgerald, once the leading wholesale broker of government bonds. Two years back, he would have been surrounded by 220 screaming comrades hard at work matching buyers and sellers. Now, he's one of just 25 brokers whiling away the day and waiting for the phone to ring.

The new center of action lies down the hall at eSpeed Inc. (ESPD ) In March, 1999, Cantor spun off eSpeed, an electronic marketplace for bond trading, in a bid to reinvent the brokerage as an e-business and prevent online upstarts from siphoning off trades. Cantor has kept its equity brokerage, which the company says remains healthy. But most of its bond trades have moved over to eSpeed--in which Cantor holds a 55% stake. In the upstart's offices, computer screens silently record billions of dollars in bond and commodity trades every hour with almost no human intervention. "Nobody believed we could go electronic so fast," says Tim Coughlin, Cantor's head of government bond trading.